Segmented Income Statements, Adding and Dropping Product Lines Dantrell Palmer has Just been appointed manager of Kirchner Glass Products Division. He has two years to make the division profitable. If the division is still showing a loss after two years, it will be eliminated, and Dantrell will be reassigned as arn assistant divisional manager in another division. The divisional income statement for the most recent year is as follows: Sales Less: Variable expenses $4,590,000 ,953,450 $535,550 575,000 38,450) 200,000 238,450) Contribution margin Less: Direct fixed expenses Divisional margin Less: Comm on fixed expenses (allocated) Divisional profit (loss) Upon arriving at the division, Dantrell requested the following data on the division's three products: Product A 12,000 $150 $100 Product B 14,500 $120 $84 Product C 10,000 $70 $107 Sales (units) Unit selling price Unit variable cost Direct fixed costs $100,000 $425,000 $260,000 He also gathered data on a proposed new product (Product D). If this product is added, it would displace one of the current products; the quantity that could be produced and sold would equal the quantity sold of the product it displaces, although demand limits the maximum quantity that could be sold to 20,000 units. Because of specialized production equipment, it is not possible for the new product to displace part of the production of a second product. The information on Product D is as follows Unit selling price Unit variable cost Direct fixed costs 230,000 $80 30 1. Prepare segmented income statements for Products A, B, and C Kirchner Glass Products Division Segmented Income Statement Products Total Sales Less: Variable expenses Contribution margin Less: Direct fixed expenses Product margin Less: Common fixed expenses Operating income (loss) Which product has the highest product margin? 2. Assume that Dantrell decides to produce products A and D for the coming year. Prepare the segmented income statements for these two products Kirchner Glass Products Division Segmented Income Statement Products Total Sales Less: Variable expenses Contribution margin Less: Direct fixed expenses Product margin Less: Common fixed expenses Operating income By how much will profits improve given the combination assumed above? Enter your answer in dollars